Political Donations – The Property and Construction Industries: A Case Study

‘Equality of opportunity to participate in the exercise of political sovereignty is an aspect of the representative democracy guaranteed by our Constitution.’¹

Summary

At a time when public trust in our democracy is low – undermined by a perceived lack of integrity in Australia’s political and bureaucratic processes, weak laws regulating the flow of money and undue influence in government – reform is needed to help strengthen confidence and trust in liberal democracy and the rule of law.

One of the key reasons for which citizens doubt that government decisions are made in their best interests is the fact that undue influence is able to bought by well-resourced individuals and groups via the making of political donations and disclosable payments.

In order to promote the transparency of political donations and disclosable payments in Australia, we have analysed data disclosed over the period 1999-2019 to the Australian Electoral Commission (AEC) in accordance with the requirements of the Commonwealth Electoral Act 1918 Cth (Electoral Act).

Our analysis categorised this data by industry and concluded that one of the largest industry contributors over the period studied was the property and construction industry, which disclosed a total of $54,152,128 in payments over the period (according to donor-reported data).

We found that over the 20 years studied, donations appeared to correlate strongly with elections and peaked in 2019 at $5,688,112: this peak is owed to donations made by Sugolena Pty Ltd, which donated $4,093,900 (or 72%) of that year’s donations.

We also found that since the introduction of political campaigner provisions into the Electoral Act in 2018,² political campaigners including the Construction Forestry Maritime Mining and Energy Union National Office, United Voice, the Minerals Council of Australia and the Business Council of Australia have received a total of $3,462,296 in disclosable payments from the industry. Where the entities making these payments disavow the making of political donations (presumably in an effort to show that they are not unduly influencing politics), there is a legitimate question to be asked about whether this is ethically consistent with the making of substantial payments to bodies which are treated as political campaigners under electoral law, insofar as the raison d’être of political campaigners is the reason for which payments made to them are disclosable under the Electoral Act. This is particularly relevant in the case of payments made to the Minerals Council and the Construction Forestry Maritime Mining and Energy Union National Office, which themselves make donations to political parties.

The enormous amounts donated by a sector whose existence depends on the issuing of government permits is highly problematic for public trust in the democratic process. After all, impartiality in decision-making must not only exist but also be seen to exist.

Our analysis makes a strong case for reform of the regulation of donations, including the introduction of donations caps and strengthened disclosure requirements:

Donations caps

• • Phase in to set donation cap at $2000 per annum per candidate and $5000 per party, from a single person or entity (aggregated);
  • An exclusion for membership, limited to $600; and
  • Private funding capped at around 50% of total party funding

Donations disclosure regulations

• A reduction in the reporting threshold for donations, with individual donations over $1,000 and aggregated donations of $3,000 over 3 years to political parties, candidates, associated entities, third parties and political campaigners being required to be disclosed;
• A broadening of the definition of ‘donation’ to include income from party fundraisers, corporate sponsorship of business forums, membership fees over $2,000 per year, and any gift that is spent on electoral expenditure (see section 5 of the Electoral Funding Act 2018 (NSW));
• Real time disclosure of donations, plus quarterly reports providing categorisation and aggregates of donations;
• A single dedicated campaign account to facilitate auditing and enforcement;
• Related companies to be categorised accordingly, and aggregated for any donation or expenditure caps (see for example section 9(8) and section 24(6) of the Electoral Funding Act 2018 (NSW)); and
• Enforcement through a strengthened and appropriately resourced enforcement division within the Australia Electoral Commission.

Australia’s property and construction industry

This classification includes property developers, construction companies, engineering companies and consultants, real estate agents, property consultants, architects and listed property trusts.³

The industry’s big donors

Figure 1 sets out the top ten entities by total amount disclosed to have been donated over the period 1999-2019.

In determining the top 10 donors, companies belonging to the same corporate group or having the same donor identification number have been classed together and their donations counted towards a single total.

Figure 1: top 10 entities making donations and disclosable payments over the period 1999- 2019

Westfield Group was demerged in 2014, creating the Scentre Group and Westfield Corporation.

Hong Kong Investment Co (headquartered in Kowloon) is owned by property tycoon Chau Chak Wing,⁴ as is Australia Kingold which describes its business as including real estate, finance, health, education, hospitality and media.⁵

Meriton describes itself as “Australia’s largest apartment developer”,⁶ while Walker describes itself as ‘one of Australia’s largest private development companies, successful for 50 years. Our legacy is developing iconic, large-scale, award-winning developments”.⁷

Leighton Holding is now known as the CIMIC Group, which describes itself as “an engineering-led construction, mining, services and public private partnerships” organisation.⁸

There is very little information available about the operations of a number of these donors: the Gandel Group, which belongs to John Gandel, co-owns Chadstone;⁹ Sugolena, linked to property investor Isaac Wakil, appointed him as liquidator on 7 August 2020;¹⁰ Furama Pty Ltd is owned by businessman Terry Jackson;¹¹ and Croissy Pty Ltd was deregistered in 2010.¹²

2019 property and construction donors

Because some of the biggest donors over the period 1999-2019 either no longer exist or no longer make direct donations to political parties, Figure 2 shows payments to political parties made by the property and construction industry in 2019, together with how the payments were directed:

Figure 2: 2019 donations and disclosable payments by entity

Disclosing entity

Of the top donors set out at Figure 1, only CIMIC has in place accessible policies in respect of political donations.

CIMIC says of government relations that:

We seek to develop positive relationships with members of Parliament at the State and Federal level, their staff, departmental officials, and others involved in the political and policy development process […] CIMIC Group does not make direct political donations. We retain the flexibility to attend functions that specifically build relationships and offer opportunities to participate in policy dialogue.”¹³

Who benefited from disclosable payments over the period 1999-2019?

Figure 3 sets out the parties which benefited from disclosable payments made by the property and construction industry over the period 1999-2019. Over the relevant period, the Liberal Party’s federal secretariat has been the recipient of more than double the funds received by the ALP’s federal branch; geographically, in respect of the States and Territories, donations were concentrated in NSW with the Liberal and Labor branches in that State receiving a combined $13,557,158 (more than triple the $4,953,763 received by the Victorian branches).

Figure 3: Recipients of property and construction industry donations 1999-2019

Donations and disclosable payments over time

Figure 4 shows that donations and disclosable payments peaked in 2019 at $5,688,112 (72% of which was donated by the Isaac Wakil-linked Sugolena Pty Ltd).

It appears that there is a strong correlation between elections and peaks in the data, with elections held in 2001, 2004, 2007, 2010, 2013, 2016 and 2019.

Figure 4: Distribution of donations and disclosable payments over the period 1999-2019

Political campaigner disclosable payments

Section 314AB(1) of the Electoral Act requires political campaigners to submit a return to the AEC within 16 weeks after the end of the financial year. Under s 287F of the same Act, a person or entity must be registered for a financial year as a political campaigner if they have incurred or authorised electoral expenditure of $500,000 or more in that financial year or any of the three previous financial years, or if they have incurred or authorised electoral expenditure of more than $100,000 and during the previous financial year the amount expended was at least two-thirds of the revenue of that person or entity. Electoral expenditure means expenditure incurred for the dominant purpose of creating or communicating electoral matter (s 287AB), and electoral matter is defined as “matter communicated or intended to be communicated for the dominant purpose of influencing the way electors vote in an election of a member of the House of Representatives or of Senators for a State or Territory”: s 4AA.

The data on disclosable payments analysed in this study have been obtained by virtue of political campaigner returns submitted by the Minerals Council, the Business Council of Australia, the Construction Forestry Maritime Mining and Energy Union National office, and United Voice: none of the contributors to any of these campaigners disclosed their contributions.

Much of the $3,462,296 in disclosable payments made to political campaigners over the relevant period has been classified on the submitted returns as ‘other’, rather than as donations. Presumably this covers membership fees and the like.